Six growing trends in corporate sustainability

Integrated reporting is slow to take hold

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The idea of integrated reporting — melding traditional financial reports with key sustainability metrics — is compelling, based on our survey respondents.

But for now, its promise remains elusive as companies grapple with whether, when and how to develop such reports.

The buzz around integrated reporting has increased significantly in just the past two years.

Today, companies publish more than 5,000 sustainability and corporate responsibility reports a year worldwide, according to CorporateRegister.com. They vary widely in content and comprehensiveness.

Most aren’t written with investors in mind; they are targeted at a broad range of stakeholders, many of which have a specific environmental, social or governance interest. For the past few years, a growing movement has been pushing companies toward reporting key sustainability data in a much more investor-friendly way.

Among the significant challenges to integrated reporting's growth (IR) is vocabulary. For example, how to bring concepts like “natural capital,” in which environmental impacts are assigned financial costs, to the CFO in a way that aligns with a company’s current understanding of risk and accounting.

Which groups have a positive impact on advancing sustainability on a global basis?

 

While it may be a while before IR is mandated by regulation, market forces may provide de facto regulatory pressures. Among the sources are stock exchanges, particularly outside the United States.

In our survey, respondents indicated a strong agreement that IR would be a positive influence on their company’s sustainability performance, and would elevate it to senior management.

43% said that integrated reporting would be “extremely” or “very” helpful in such things as breaking down the silos, involving the CFO/finance team in sustainability-related initiatives and reporting, and validating the existence and importance of non-financial information reporting. Only about 12% said such reporting would not helpful

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